One day after the government halved its GDP forecast, economists at Standard Chartered Bank (渣打銀行) yesterday remained optimistic, saying falling oil and raw material prices as well as closer ties with China would bolster the local economy next year.
“Taiwan has the advantage of being next to the Chinese market, which is the region’s growth driver with attractive products [to tap into domestic demand there],” Nicholas Kwan (關家明), the bank’s regional head of research in Asia, told a media briefing yesterday.
He said that Asian countries may not be immune to external shocks from the global slowdown, but finding new markets and boosting domestic demand would be the two best strategies to combat the slowdown.
He estimated that Asian economies would bottom out and recover at the end of next year or early 2010, but Asian stock markets may hit rock bottom earlier.
The bank’s Taipei-based economist Tony Phoo (符銘財) said that the local economy has been on a downward correction since the end of 2006 and was unlikely to stay down in the upcoming business cycle.
He maintained his GDP forecast at 2.8 percent for this year and 3.1 percent for next year, in contrast to the government’s latest estimates of 1.87 percent for this year and 2.12 percent next year.
He said that he believed the government’s recent stimulus measures would help put the economy back on track.
“In spite of the downside risk, we believe it is likely that the local economy would post 1 percent growth in the first half of next year,” Phoo said.
He said that record-low oil prices would help reduce costs for domestic businesses, 90 percent of which import capital goods instead of consumer products.
The bank projected that Hong Kong would post 1.5 percent GDP growth next year, down from this year’s 3.7 percent, while South Korea’s GDP may grow by 4 percent next year.
In related news, CPC Corp, Taiwan (台灣中油) yesterday announced it would lower domestic gasoline prices by NT$1 (US$0.03) a liter and diesel prices by NT$1.1 a liter, effective today. Rival Formosa Petrochemical Corp (台塑石化) will also follow suit.
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